Article #: 25
Title: Exploring the Hedonic Value of Ambient Water Quality: A Local Watershed-based Study
Authors: P. Joan Poor, Keri L. Pessagno, Robert W. Paul
Journal: Ecological Economics; Vol. 60
Date: 2007
Pages: 797-806(KB 11/12/08)
Abstract:
This article studies the value of ambient water quality based on measurements from 22
monitoring stations in the St. Mary's River Watershed, a small local watershed in Southern
Maryland that feeds into Chesapeake Bay. The water quality variables are associated with
increased run-off, due mainly to impervious surfaces used in human development. These
variables are total suspended solids and dissolved inorganic nitrogen (DIN). These values are
compared with residential housing prices using the hedonic property valuation model to
determine the marginal values of ambient water quality, or how one "unit" of water quality
changes the value of property. This study hopes to quantify the value of benefits of preserving
this local watershed in order to justify financing continued monitoring costs.
This study finds that a one unit (milligrams per liter, or mg/L) increase in total suspended solids
has a negative impact on average housing prices within the watershed by $1086. A one unit
(mg/L) change in the dissolved inorganic nitrogen (commonly associated with contributing to
eutrophication) also has a negative impact on average housing prices within the watershed by
$17,642. These results confirm public opinion polls in the area that local residents are concerned
with local water quality surrounding Chesapeake Bay. This study is unique because it uses the
hedonic property valuation model for an entire local watershed, which includes non-waterfront
properties not typically included. It is successful in establishing that water quality does affect the
entire watershed property values, not just the waterfront properties.